Pinky and the Brain

Using an expensive education to ramble about Economics, Politics and English Beer

Friday, June 30, 2006

Congress Screws Envrionment

The House just passed a bill ending the moratorium on off-shore drilling, that has been ongoing since 1981. Those states which would actually have to look at the rigs (such as Florida) are opposed to the bill, even though it includes billions in subsidies. It is not surprising that oil-guzzling California representatives brought out the pom-poms for this one. It is scary that I must rest my hopes on the Senate saving the day.

Why am I opposed to the drilling? Like ANWAR, this is an environmentally destructive policy that will have very little impact on the price of oil and gas ... but will have significant profits for petroleum corporations.

More on Guantanamo

Though Mark Levin may have a point here, his entire rant is essentially undermined by his failure to acknowledge and grapple with the fact that many - no one knows how many - of the 450 or so inmates of Guantanamo Bay are not enemy combatants at all. As Kevin Drum notes,

the evidence has mounted for years that many of the detainees at Guantanamo were picked up randomly in Afghanistan or turned over for reward in Pakistan, and are being held with essentially no evidence at all.

All of this relates to another problem with the administration's Guantanamo policy:

Meanwhile, it's always worth recalling the administration's underlying legal theory about Gitmo. This holds that U.S. law doesn't apply there because it's in Cuba. But Cuba doesn't actually get to have sovereign control over the area either, because if it did we'd have to leave as per their request. So, basically, it's a legal null zone where you can just do whatever.

Thus, instead of seeing the Hamdan decision as some kind of attempt by SCOTUS to usurp the power of the presidency, a more accurate reading would center on SCOTUS's attempt to insist that the administration's legal reasoning needs to be based on more than purposeful ambiguity.

UPDATE: For more evidence that the Supreme Court made the right decision, see here.

Thursday, June 29, 2006

Reason for the Israel Invasion

"If the Palestinians act now to release Cpl. Shalit and hand him back to us ... we would immediately initiate a dramatic reduction in tension," Israeli Foreign Ministry spokesman Mark Regev said. "He is the primary issue, he is the primary reason for the crisis."

I don't believe that's really the case. It is my entirely speculative opinion that Israel has been looking for an excuse to lash out at the Hamas government since the day they were elected. The kidnapping of Cpl. Shalit was a perfect opportunity. Invading the Gaza strip and arresting Hamas ministers is not a proportional response to the kidnapping of a single soldier.

Israel is going to using its military superiority to welcome the new government to the block. To be fair, the Hamas government has done little to cool its rhetoric since the election: this was bound to happen.

Iran 2

I should have been more specific about why I'm worried by Iran's foot dragging. My concern is not that they will suddenly unveil an ICBM, or highly enriched uranium, but rather that they won't accept the package at all. It is possible 1) that delaying their response is another way for the Iranian government to show their strength or that they actually need the time to convince the hardliners; it is also possible 2) that they are delaying because they don't want to give up enrichment. I'm not convinced that the first scenario is more likely ... and that's what worries me.

Enough is Enough!

Today the Supreme Court ruled that President Bush overstepped his authority in ordering military war crimes trials for Guantanamo Bay detainees. As to the implications of all this, well, I think Spencer Ackerman puts it best:

What a great day for the rule of law in this country. It's now pretty clear why the Bush administration wants to keep as much of its constitutional rationale for the war on terror out of the courts as possible. There'll be more to say on the military commission ruling soon, but for now, let's just salute the Court for saving us from a stain on our national honor.

More on Iraq Troop Withdrawals

So it looks like the President has been presented with yet another opportunity to essentially declare victory and get out of Iraq. The problem is that Republicans would rather use the issue of American troop withdrawals as an election-year bludgeon against Democrats who have essentially been echoing the same sentiments as Maliki and his key cabinet ministers on the one hand and the American public in general on the other. Yet another obstacle here is that it is becoming increasingly apparent that the White House doesn't want to leave Iraq because, simply put, they want to stay in Iraq (See here and here).

Last week, Newsweek reported that the national reconciliation plan presented by Maliki this past Sunday would include a timetable for the withdrawal of U.S. troops from Iraq. As TNR's Spencer Ackerman noted at the time, such a plan seemed like the perfect escape route for the Bush administration from Iraq. Moreover, it looked like it could shield the Bush administration from criticism from the right in that it was the Iraqis - not the Democrats or Europeans or whatever - who were actually asking us to leave! However, when the actual plan was revealed on Sunday, a timetable for the withdrawal of U.S. troops was conspicuously absent. Why exactly this was the case is anyone's guess but the most plausible explanation seems to be that the U.S. wasn't too keen on "a plan that depended on exploiting hatred of us to unite the country."

In what is increasingly becoming the conventional wisdom, some kind of plan for a significant drawdown of U.S. forces is an absolutely necessary prerequisite for any serious dialogue between the Iraqi government and insurgents. Instead of reflexively dismissing withdrawal as appeasement, the Bush administration needs to take advantage of the recent openings provided by Maliki and some Sunni insurgent groups. Polyannish platitudes about "staying the course" or "we must endure until the insurgency is defeated" are giving Americans a skewed view of what is required in Iraq.

Re: Iran's Response

Though on the face of it it doesn't seem wise to give Iran the benefit of the doubt on just about anything, I'm not sure I'm as worried about Iran's feet-dragging as Peter is. As Matt notes,

Iran is years from a nuclear weapon. Their program is a serious issue, but not an urgent one in the sense that it makes a big difference whether we solve it in July or December or even next August. If they want a month, let them have a month. The Bush administration's "reject proposal out of hand without considering whether you might be making a huge mistake" approach to the delicate subject of US-Iranian relations isn't a great model to follow. Their much-vaunted deal with Libya, meanwhile, took years of diplomatic work across two administrations to cement. Some wheels turn a bit slowly. That's life.

Wednesday, June 28, 2006

Israel-Palestine .... Again.

Israel is preparing to invade the Gaza strip to secure the release of a captured prisoner, but they can't actually believe that they will find him alive by the time they get there. Even if the terrorists weren't planning on killing him, they will do so out of retribution after the Israeli bombs start killing civilians.

I think that the captured soldier is just the excuse for Israel's attack. The day that the Palestinian people elected Hamas as their government, they destroyed the peace process. By electing a government which refuses to recognize Israel's right to exist, the Palestinian people have implicitly declared war on Israel.

Abbas is right: this is "a crime against humanity," but Israel isn't the only agent at fault.

Tuesday, June 27, 2006

Iran's Response

Iran is reportedly waiting until mid-August before responding to the Western package of incentives. Although I appreciate that the topic is politically sensitive in Iran, and that it will take some work to convince Hard Liners to suspend enrichment, these continual stalling tactics on the part of Iran worry me.

Monday, June 26, 2006

Troop Withdrawal

There is little doubt in my mind that this administration has made up its mind to reduce troop levels in Iraq. Although it is long past due, this type of hypocrisy drives me crazy. Bush maintains that the decision will be "based on conditions on the ground," but conditions are not improving. Just admit you made a mistake and that it is time to bring US troops home.

The administration will bring the troops home and then declare victory, regardless of whether the civil war quiets down. I respect a man much more when he can admit and learn from his mistakes.

Sunday, June 25, 2006

Feingold on MTP...

Beckham: Sit him or Play him?

England took care of business against Ecuador today 1-0 in what was generally a rather boring affair. England's lone goal came from a masterful free kick from skipper David Beckham.

Despite Beckham's heroics - his beautiful pass also set up Peter Crouch's game winner against Trinidad and Tabago - a slew of voices have suggested that Beckham would better serve his team on the bench rather than on the pitch. The argument is that Beckham has lost a step or two and that someone like the faster and quicker Aaron Lennon would be pose more problems for opposing defenders and enhance the flow of the England offense. Anyone who say Lennon against Trinidad and for the briefest of moments at the end of today's game against Ecuador can see where the critics are coming from.

Though I don't profess to be an expert - or even a novice - when it comes to football, I don't know if replacing Beckham would solve England's problems. When you yield the kind of incendiary right foot that Beckham does, you're a threat to score whenever/wherever you touch the ball. You better have something really special in reserve if you're going to give that up and though Lennon is a nice young player, I'm not sure his upside merits replacing Becks.

Saturday, June 24, 2006

Subsidies Part 1: The Social Value of Veterinary School

At breakfast this morning, my girlfriend and I somehow got on the subject of veterinary school: acceptance rates, number of schools in the US, cost of school and (most interesting for me) government subsidies.

Most people know that higher education is expensive, but fewer people realize how much the government subsidizes that education. I could do a cost-benefit analysis of all different levels of education, and types of degrees (medieval history, for example). The analysis would likely show that the government underfunds some degrees, and over-subsidizes others.

As a case study, lets look at the Mississippi State University veterinary school, which is the smallest accredited veterinary college in the US. Mississippi's program costs $12 million to operate each year. In-state tuition is about $12,000 a year and out-of-state tuition is about $31,000 a year. There are 72 students in a class, 50% of which are in-state. This means that students pay for $1,548,000, or 12% of the yearly costs of the school. The rest of their education, 88%, is paid by government subsidies, and presumably, by some endowment.

What is the social benefit of educating these 72 students? The subsidy will increase the number of vets who graduate, and unless vets are colluding, lower the cost of veterinary care. That means pet owners will get cheaper care and the price of your ground beef is probably one millionth of a cent cheaper in the supermarket.

Is it worth it? That really depends on whether there are positive externalities to educating vets. There are probably positive externalities from veterinary research for feed animals (since I don't think markets correctly value most innovation). But, the government could better promote this by offering scholarships to the best students or by offering financial incentives for certain innovations. Pets are said to make people live longer and healthier lives, and cheaper vet care may translate into owning more pets. However, this pet-effect is likely dominant for single people in old age, rather than people of prime working age, which is what cold-blooded economists care about more.

I believe that the government should subsidize most education. In the case of medical school (for humans), I feel that the government could probably subsidize more and should try to open more schools. Given that there are fewer positive externalities for vet school, and the fact that they turn away many qualified applicants each year, I feel that there is probably too great of a subsidy for animal care. And yes, that means I value people more highly than animals.

Spitfire

About a week ago my parents were over from Wisconsin visiting me here in London and one of the many pubs me and my pa frequented was the Rugby Tavern. Despite the fact that the Rugby is a mere 5 minute walk from where I live this was my first time at the pub. The Rugby is a Shepherd Neame Pub with Spitfire Ale being one of their signature brews.

I'm not a big fan of ales so I wasn't surprised that I didn't take too well to Spitfire. All the same, it had a nice smooth taste and seemed to be popular amongst the pub patrons as most of the people in the pub were walking around with Spitfires in tow. Spitfire also has an interesting history. Spitfire was first brewed to commemorate the 50th Anniversary of the Battle of Britain in 1990 and raise money for the RAF Benevolent Fund.

Friday, June 23, 2006

Ralph Nader on Rumsfeld

A Princeton professor sent me a link to this website he started, called P-Rok. The site has some good material, including an undated interview with Ralph Nader, who was a year behind Rumsfeld at Princeton. Some of the quotes are priceless:

RN: Jock. Everybody thought [Rumsfeld] was going into business and would make a lot of money in the corporate world, which he did. Of course. But there was no indication that he was going to turn into the belligerent, obstinate, closed-minded person who now runs the Pentagon.

RN: The thing that I remember is that he had a “dig in his heels” personality. So when he is cornered in a very bad, fabricated, criminal war, he is stubborn rather than reflective.

Nader is a little too honest to be a successful politician, but he gives great interviews.

Thursday, June 22, 2006

More Afghanistan...

Every Democrat I know, including me, supports the War on Terror. What many of us do not and did not support is the War on Iraq. These are two separate things. For those of you who chose to believe that we had to wage war against Saddam because of WMDs, or democratizing the region, or "links" to Al Qaida and 9/11, there were an equal number of us who felt that all of those arguments were a sideshow, a distraction, from the REAL war. That war was taking place in Afghanistan and Western Pakistan. How many Democrats have you heard or read about that are "ambivalent" about THAT war? And how do you think we feel now, watching that one - the real one - slip away? I am heartsick that we did not finish the job. It sickens me that Osama has slept soundly since the Spring of 2003. Guess what, he knows we're not coming.

While I'd disagree with the assertion that U.S. troops aren't busting their asses trying to find and kill bin Laden, it's difficult to take issue with much else that's said here.

Afghanistan on the brink

While the House and Senate continue to debate the merits of the U.S. military presence in Iraq, Afghanistan continues to drift steadily toward the brink of disaster. 58 coalition troops were killed in 2004 but that number jumped to 129 in 2005 and is already at 69 so far this year. In the words of Afghanistan expert Ahmed Rashid, author of the best-selling book Taliban,

Since 2003 when the Taliban first began to regroup, they have gradually matured and developed with the help of al-Qaeda, which has reorganized and retrained them to use more sophisticated tactics in their military operations. As recently as a year ago, the main Taliban groups were composed of a few dozen fighters; now each group includes hundreds of heavily armed men equipped with motorbikes, cars, and horses. They burn down schools and administrative buildings and kill any Afghan who is even indirectly associated with the government. In the south, they operate with impunity just outside the provincial capitals, which have become like Green Zones. Approximately 1,500 Afghan security guards and civilians were killed by the Taliban last year and some three hundred already this year. There have been forty suicide bombings during the past nine months, compared to five in the preceding five years. Some 295 US soldiers and four CIA officials have been killed in Afghanistan since September 11, 2001 —140 by hostile action.

Even right wingers like Michael Yon are starting to admit that things are taking a turn for the worse.

One of the most powerful arguments for staying out of Iraq back in 2003 was that launching an invasion there would draw attention away from the threat posed by al-Qaeda and compromise our ability to attend to our unfinished business in Afghanistan. As it stands, it looks like those fears are coming to fruition:

It is now five years since George W. Bush declared victory in Afghanistan and said that the terrorists were smashed. Since the Bonn meeting, in late 2001, a smorgasbord of international military and development forces has been increasing in size. How is it, then, that Afghanistan is near collapse once again? To put it briefly, what has gone wrong has been the invasion of Iraq

Senate Makes Another Mistake

The Senate today rejected proposals on withdrawing U.S. troops from Iraq, decisively voting down two competing Democratic amendments -- one that set a deadline for a pullout and the other that stopped short of establishing a timetable.

Once again, the Senate rejects a reasonable proposal. US troops enflame an already delicate situation; every scandal gives more power to the insurgency and both US and Iraqi civilians die in the process. Bringing our troops home would allow Iraq to settle their civil war.

A friend of mine in Iraq tells me the US is putting permanent infrastructure in its bases: no matter what sort of scale back the war hawks have in mind, it doesn't seem to involve giving up our military presence there. Just another mistake to add to the long list.

Wednesday, June 21, 2006

Paying Teachers More

An NBER paper this month studied the impact of an $1,800 annual bonus on retaining certified math, science and special ed teachers in high-poverty areas or academically failing public schools. The authors found a decent reduction in turnover rates (12%) and argue that the impact would be more if the State had done a better job of educating teachers about the selection criterion (sound familiar? think prescription drug bill).

For me, the real issue is the impact of annual teacher bonuses on educational outcomes. Evidence from the developing world suggests that money is better spent on buying more books in school, and that educational outcome depends more on family wealth than school quality. I'm not up to date on the literature on developed countries, but i'm not convinced spending more money on teacher salaries will make a big difference. A brief review of the literature shows a general consensus that more money is not clearly the solution.

Lets look at 5 statistics:

1) In 2002 alone, the US invested $192 billion in teacher pay and benefits.2) The US school year is 180 days.The world average is 200-220 days.The Japanese school year is 243 days.3) International comparisons show US students lagging behind their counterparts.4) After accounting for vacation, most Americans work about 25 percent more than the typical teacher.5) Economist Richard Vedder has observed that the Bureau of Labor Statistics National Compensation Survey shows that teachers earn “more per hour than architects, civil engineers, mechanical engineers, statisticians, biological and life scientists, atmospheric and space scientists, registered nurses, physical therapists, university-level foreign-language teachers, [and] librarians.”

I wouldn't argue that more money is not necessary for solving our educational problems, but it seems obvious that it is not sufficient.

Tuesday, June 20, 2006

But I thought it was the Media's fault we're losing in Iraq...

Back in May, the bozos over at Powerline commented on how well they thought things were going in Iraq:

So, is Iraq a disaster? There is little or no objective evidence to support that claim, but any claim, made often enough, will gain acceptance if the basic data that contradict it are never mentioned.

Given that Powerline and reality inhabit separate universes, it's unlikely that this memo sent recently by Ambassador Khalizad to the State Department will do anything to dissuade them from their belief that we're winning in Iraq. For the rest of us, however, the contents of this memo are nothing short of terrifying. Here are some highlights, courtesy of Kevin Drum:

1. Women are being increasingly harrassed: made to wear a veil, told not to use cell phones or drive a car, and being forced to wear the hijab at work. Men who wear shorts or jeans have come under attack from "what staff members describe as Wahabis and Sadrists."

2. Different neighborhoods are controlled by different militias, and staff members have to be careful to dress and speak differently in each one. "People no longer trust most neighbors." Even the upscale Mansur district is now an "unrecognizable ghost town." A newspaper editor reports that ethnic cleansing is taking place in virtually every Iraqi province.

3. Electricity is available for only a few hours a day and fuel lines can require waits as long as 12 hours.

4. Being known as an embassy employee "is a death sentence if overheard by the wrong people."

5. "Objectivity, civility, and logic" from staff members are becoming harder to come by as pressure outside the Green Zone increases. The embassy can't get good information if people become too scared to speak honestly.

al-Rubaie, Traitor?

Today's WaPo piece by Iraq's new national security advisor Mowaffak al-Rubaie is likely to throw the folks over at the Weekly Standard into a tizzy.

Al-Rubaie begins by presenting a rather vacuous "unofficial 'road map' to foreign troop reductions that will eventually lead to total withdrawal of U.S. troops." However, he is quick to point out that this plan should not be viewed as some kind of timetable since it is based "on the achievement of set objectives for restoring security in Iraq." These objectives include ensuring that each of Iraq's 18 governates have stabilized the security situation in their province and demonstrated that their own local police and military units are capable of operating effectively. Though al-Rubaie does not deny that Iraq continues to be engulfed by an "endless spiral of violence" he insists that Iraq should be able to have full control of the country by the end of 2008 with most U.S. forces to be sent home by the end of 2007.

At the heart of al-Rubaie's withdrawal plan is his admission that it is the U.S. military presence itself that is driving the insurgency. Only "the drawdown of foreign troops will strengthen our fledgling government to last the full four years it is supposed to," he writes.

Given that the likes of the Standard are fond of labeling U.S. proponents of a withdrawal plan from Iraq as defeatists or traitors, it will be interesting to see what they label Iraq's own national security advisor. To be sure, al-Rubaie's "plan" differs from the recent proposal put forth by Feingold, Kerry, and Boxer, but really only in so far as the Senators think we should be out by July of 2007 (as opposed to the end of 2007). Ultimately, the spirit animating the two proposals is the same: the U.S. troop presence is hindering - not helping - progress in Iraq.

Monday, June 19, 2006

Fox News on the Offensive

I've never enjoyed Fox News so much. It might not be news, it might not be fair, it might not be balanced, but it's great entertainment. The anchorwoman, Julie Banderas, goes so far as to ask this woman to leave the country and challenges whether someone so crazy should be an American. I don't agree with everything you said (excluding crazy people and relgious fanatics citizenship, for example), but nonetheless, Julie Banderas, I salute you.

Sunday, June 18, 2006

North Korea

North Korea is reportedly close to testing a Taepodong-2 missile, which would be capable of reaching the US with a light payload. As usual, I hope they aren't dumb enough to enflame the current situation. My fear is that two things could follow from the test: 1) Most likely, Japan would have greater security concerns and move towards getting nukes of its own, which the US would probably allow, and supply, as a check on China. 2) There would be renewed sanctions, futher impoverishing the North Korean people, and destroying the possibility of economic prosperity undermining the authoritarian regime.

Like the Iran situation, this is a consequence of US aggression in Iraq and Bush's rhetoric of 'the axis of evil', which has rightfully made all authoritarian regimes nervous and more desperate to acquire nuclear weapons. Way to go Team America.

Billions in Waste

"No one really knows exactly how the $10.4 billion in federal housing aid will be spent."

"With the anniversary of Hurricane Katrina anniversary [sic] approaching, local officials have yet to come up with a redevelopment plan, showing what kind of city will emerge from the storm's ruins."

Could you imagine going into a bank for a small business loan and telling the bank officials that you didn't have a plan for spending the money, and futhermore, you weren't actually sure what you were going to spend it on?

The people in New Orleans need help, but the US should not be spending $10.4 billion dollars rebuilding a city below sea level, at a time when sea levels are rising, and hurricanes appear to be getting worse ever year. The destruction of New Orleans was a tragedy. We shouldn't be sowing the seeds for future tragedy by plopping the city back under water.

Friday, June 16, 2006

On Being Useless

Lets hear it for that vacuous waste of space known as the Republican controlled congress. In another pointless, political bill, the House of Representatives just passed a nonbinding resolution which declares, "that the United States will prevail in the Global War on Terror," and effectively endorses President Bush's Iraq policy. The Bill forced Democrats, who oppose Bush's disastrous policies, to vote against "defeating terrorism" or support President Bush.

This Bill does nothing to rectify the long list of problems facing our country, cleaning up the corruption in Washington and exemplifies the uselessness of the current Congress. The American public is not impressed.

Lets look at the polls:

AP-Ipsos reported on the 7th of June, 2006, that 73% of those sampled DISAPPROVE of the way Congress is handling its job.

A CBS Poll from April 2006 says that 67% of those sampled believe Congress is accomplishing less than it normally does.

I won't pretend that the Democrats in the house are all saints, but lets at least punish the controlling party; if we don't hold our politicians accountable, there's nothing to stop this from continuing. I, for one, have had enough.

Thursday, June 15, 2006

Real Money

From the AP:

The U.S. Senate on Thursday easily passed a $94.5 billion compromise emergency bill to fund the Iraq and Afghanistan wars and rebuild after last summer's hurricanes, sending it to President George W. Bush

Of this sum, $65.8 billion is to be pissed away in the desert somewhere east or north of Tikrit. $19.8 billion will be marginally better spent on rebuilding areas just in time for the next hurricane season. I love government spending, but a crack-addict dog could better spend our tax dollars. Don't get me wrong, I support our efforts in Afghanistan (I think our money is well spent buying their support) and I believe the federal government should be helping those who were hurt by Hurricane Katrina.

My issue with this spending bill is that the majority of the money goes to Iraq and the money which is spent for the Hurricanes will perpetuate building in hurrican prone areas, most notably areas which are below sea level. Of course, it also adds $94.5 billion to the national debt, which has grown every day that the republicans have controlled Washington. What happened to small government conservatives?

Wednesday, June 14, 2006

Bush Makes More Muddled Statements

From the Washington Post:

"My message to the enemy is don't count on us leaving before we succeed," Bush said in the Rose Garden of the White House. "Don't bet on American politics forcing my hand, because it's not going to happen."

"I hope there's not an expectation from people that all of a sudden there's going to be zero violence," Bush said. "In other words, that's just not going to be the case."

I still want to know what victory looks like for us in Iraq. The real reason we don't have a time table for withdrawl, is because we have no definition of victory. Bush says we're not leaving "before we succeed," but the Iraqi civil war is not objectively getting any better. There may be more trained government troops, but the bombings, beheadings and ethnic strife continues. There may be newly elected ministers but the oil pipelines are still down, the electricity is out and the economy is worse now than before the war. And most importantly, it does not look as if it will get better in the next year.

Bush has created a tautological argument for success. We won't leave until we succeed, but the moment we leave will define success.

TDS Strikes Again

New Beginnings, Part II

First off, thanks to Peter for starting this blog and for inviting me to contribute some thoughts. Like him, I'm an American graduate student studying in the UK. And, like him, I think the road the Bush administration has taken this country down the past 5 years has put America in a position of weakness rather than strength. At the risk of engaging in Tom Friedman-style over-prognostication, I think the next two years are going to be crucial in determing whether or not America can get itself back on track before it's too late.

Tuesday, June 13, 2006

Bernanke on Personal Finances

"U.S. households overall have been managing their personal finances well," Bernanke said. "On average, debt burdens appear to be at manageable levels and delinquency rates on consumer loans and home mortgages have been low," Federal Reserve Chairman Ben Bernanke said Tuesday.

I need to do some more research on this, because I have been under the impression that Americans have rising, spiraling credit card debt, and that a dangerous number have variable rate mortgages at a time when the Fed is trying to tame inflation by hiking the interest rates.

I understand that part of the Fed Chairman's jobs at this time is to keep consumer spending upbeat, but I question the sincerity of some of the testimony. Expect future posts on this subject.

Friday, June 09, 2006

Mexicans and Unwanted Jobs

A piece of common wisdom often stated in relation to our current immigration issues, is that illegal immigrants are doing jobs that other Americans simply don't want to do. In a CBS News/New York Times poll in May 2006, 53% of respondents believe that illegal immigrants are, "mostly taking jobs that Americans don't want."

What these people fail to understand is the relationship between the jobs people want and the pay they receive. In other words, Americans don't want the jobs illegal immigrants are doing because the wages are terrible. How many Americans want to dig ditches in the hot Texas sun for $5.15 an hour? The supply of labor to any particular job depends largely on the compensation provided. How many Americans would dig ditches in the hot Texas sun for $100 an hour? People would be lining up.

If the supply of labor depends on the wage level, what are some factors that determine wages? Wages depend largely on the supply of labor for that job. Illegal immigrants raise the supply of labor for low-paying jobs and therefore depress wages. If there were fewer illegal immigrants, low-wage jobs would pay better and more Americans would want them.

To be fair, in an open economy with competitive foreign firms, there are some industries and occupations which only exist with low wages. However, the fact that the real wages of dish-washers and other low skill professions has fallen over the last 20 years (a job which is not open to international competition, like the proverbial barber in economics textbooks) suggests that the net effect of illegal immigration has been to depress the value of low-skill labor in the US.

Admittedly, technological advancement has made many jobs in the US obsolete, however, this does not detract from the fact that immigration aggravates the situation for low skill workers.

Corporate profits have never been better, but it's the little guy that suffers.

Thursday, June 08, 2006

US Economy

I think a lot of people fail to appreciate the incredible economic power of the United States. Some of my more radical, liberal friends speak of the US as if it is an economic disaster, using generalizations such as, "The US economy sucks right now." While I believe the economy could be doing much better (and worry about the long term consequences of our large budget and current account deficits, not to mention the consequences of increased inequality), it is helpful to put our problems in context. The US GDP for 2005 was roughly $12.49 trillion (Official Exchange Rate), which, for those of us who like marveling at all the zeros, is $12,490,000,000,000.

According to the most recent estimate by the White House, the economy will grow by 3.6% this year. That means the economy will be $449 billion ($449,640,000,000) larger next year. That’s a lot of clams. As the quip goes, a billion here and a billion there, and pretty soon we’re talking about real money. How much is $449 billion?

The GDP of Poland was $246 billion in 2005, which means that the US addition to world economic output, this year, is equivalent to adding 1.86 Polands worth of GDP to the world economy.

The GDP of Mexico was $693 billion in 2005. So the economic growth of the US this year is equivalent to 64% of the total economic output of Mexico, a country with 107 million people.

The size of the US economy is such that a 3.6% growth rate, which is now considered mediocre by most people, adds more to the world economy than the productive output of entire countries, or regions in the case of sub-Saharan Africa.

There are many problems with the US economy: real wages are falling for most people, the wealthy now have a greater portion of the economic pie than at any previous time, American citizens have too much debt, the US government has too much debt, inflation is gaining momentum, gas prices are absurdly over-priced, etc.

However, let us not forget that the US has enjoyed economic prosperity and growth like no nation in history, and, despite our multitude of problems, most evidence suggests that we will continue growing at reasonable rates for at least the next 5 years.

Wednesday, June 07, 2006

Back The Right Horse

If Democrats want to win some seats in this congress, they need to pick some candidates that don't look like school board members. As sleazy as "lobbyist Brian Bilbray" may be, at least he looks like a congressman. Above: Democract Francine Busby. Below: Republican Brian Bilbray

Tuesday, June 06, 2006

Iran: Positive Steps

Incredible. I underestimated the diplomats in this administration.

Here's what they're supposedly offering Iran:

1) US nuclear technology, on top of European help in building light-water nuclear reactors2) Airplane parts3) Support in joining the WTO4) Iran does not have to give up uranium enrichment, it only has to "suspend" it.

If this is indeed what the US and Europe are offering, I believe Iran will accept it in return for suspending enrichment. To most observers, this looks like a major concession. The US has moved, in a very short time period, from calling Iran an axis of evil to offering nuclear technology. In reality, offering US nuclear technology is probably more symbolic than substantive, since the Europeans have already offered to help build light-water reactors. The reactors will be well monitored. The US is certainly not providing technology for enriching Uranium, which is everyone's biggest concern.

Offering airplane parts is easy. US sanctions have decreased the safety of Iran's Airbus planes. The offer for support in joining the WTO is certainly positive. Isolating the regime obviously has not help over the last 20+ years, and allowing Iran to enter the WTO could yield positve changes. In particular, a strong merchant elite in Iran, opposed to war and laws which suppress economic growth, could sow the seeds for a slow, peaceful revolution in Iran.

The key to this package is the "concession" that Iran does not have to give up the right to uranium enrichment, it only has to suspend that enrichment for a long time. This is once again symbolic. Diplomatic agreements are easily and carelessly broken anyways, particularly in the long-term. But, for Iran, this is the starting point for their negotiations. It is a requisite for their honor. They refuse to accept western dominance of their affairs. Since Iran would never give up the right to enrichment peacefully, the suspension of that agreement "for a long time" is as good as it can get.

This is diplomacy with some promise. It will hopefully achieve what the US and Europe really desire: halting Iran's increasing capabilities to develop nuclear weapons. Iran can take this as a significant victory and halt its enrichment program for a while.

The willingness of the US to engage diplomatically and these symbolic concessions should give Iran confidence in its security. I still believe that Iran wants nuclear weapons in the long term, but these latest overtures should be enough for it to stop its program ... for now.

I'm interested to see US hawks get their panties in a bunch over this one.

Richard Dreyfus

I just went to a talk by Richard Dreyfus. He is very well spoken if painfully idealistic. He spoke about the modern media, the failure of our political leaders and the need for people to demand more from debate than just melodrama. I appreciated that he abstained from Bush-bashing and based his critique on more fundamental problems within "Western" society. Avoiding partisan generalizations is a necessary, if not sufficient condition for a commendable worldview. Another would be the merit of your argument; Richard failed this test. I won't bother you with details. If you have a chance to hear him speak, it is worth an hour of your time, even if not very edifying.

Harvey's Bitter

I was cycling through sussex the last couple of days and tried Harvey's Bitter. I heartily recommend it. Harvey's is the oldest independent brewer in Sussex. Founded in 1790, they have a well tried recipe. It is a surprisingly mild beer given its dark amber and 4.0% vol. alcohol content. If you have disposable income and want some ambiance, try a pint in The Bull in Benchley.

Sunday, June 04, 2006

Can Canadians be Terrorists?

From the AP:

Canadian police foiled a homegrown terrorist attack by arresting 17 suspects, apparently inspired by al-Qaida, who obtained three times the amount of an explosive ingredient used in the Oklahoma City bombing, officials said Saturday.

Before I make fun of this, let me say kudos to the Canadian police for catching these people.

What I like about this article is the defense offered for the suspects by Steven Chand, who is a brother of one of the suspects. When the press asked Mr. Chand his opinion, he adamantly proclaimed their innocence and argued it was a witch hunt on the part of the police. His evidence?

"[My brother] is not a terrorist, come on. He's a Canadian citizen."

Which begs the question, can Canadians be terrorists? According to Mr. Chand's theory of crime, Canadians are incapable of being terrorists. It is true that they are generally peace and hockey loving people, but "come on" Mr. Chand, you'll need a better defense than that.

He did not seem to have a comment as to what the group planned to do with the fertilizer, the cell phone rigged into a detonation box and training gear.

Saturday, June 03, 2006

Afghanistan Drug Trade

From the AP:

Sixteen Afghan soldiers have graduated from a new training program at Fort Bliss, armed with knowledge on how to fly Russian-made helicopters in anti-drug missions over their war-torn country. The men will now make their final preparations to head back to Afghanistan, where they are expected to immediately get to work trying to halt the booming narcotics trade.

Fighting the heroin trade in Afghanistan is a recipe for disaster. It will not significantly reduce the amount of heroin produced and will cost Afghanistan lives as well as much needed revenue. Colombia has tried to battle its drug lords (significantly) for the last 30 years and has very little to show for it. The US invested several billion dollars in Plan Colombia, but after years of spraying and forays into the jungle, the total production of the crop has not significantly changed. The war on drugs in these countries should not be waged against the war lords, it should be waged against the economic poverty which gives poor farmers no better alternative.

In Colombia, farmers grow coca because it pays significantly more than any other crop; for many of them, it is the only cash crop they can grow, since it takes to long to get other produce to market.

According to a spokesman from the Afghanistan embassy in Washington: "Your [the Afghanistan Pilot's] graduation is a testament to the long-term commitment of the United States to Afghanistan." Interestingly, heroin production has significantly increased since the US invasion; however, I do not mention this disparingly. Heroin could potentially be very positive for Afghanistan if they were to legalize its production. Poppy is a valuable crop that grows well in the area, and offers a higher return than any alternative produce. As long as the country keeps a tight control on demand, it should not have negative spillovers into other parts of the economy. Legalizing the heroin production also wrests control of the most valuable industry in the country away from the war lords.

Money is a means to power, both in military and popular terms. The Afghanistan government cannot win this fight. Its best option is to tax the drug and let competition neutralize the relative power of the various producers. It should spend the tax money on developing alternative opportunities for its people and keeping its people from using the drug.

Evidence from Colombia suggests that most producers do not use the drug themselves.

Since the experience in Colombia suggests the US is unable to stop production in foreign countries, we need a better strategy. The US should allow Afghanistan to legalize the drug and should focus on lowering demand at home. If the US and Europe successfully lowered demand, prices would fall below an economically viable price in Afghanistan and producers would no longer have a reason to grow the poppy. Meanwhile, the increased economic activity in Afghanistan will allow the economy to expand into other areas. As people get wealthier, they'll find better things to produce. If we spend our money destroying their economy, there's no sign that the situation will ever improve.

Tobacco Spending

I came across this report at the Bureau of Labor Statistics, titled (tantalizingly) "Tobacco Expenditures by Education, Occupation, and Age." (Mark Vendemia 2005)

I was struck by the figures. Although information about the ill-effects of tabacco is more prevalent today than ever before, people continue to spend vast sums of money of tobacco products. In 2002, the average expenditure per consumer unit [1] was $320, which is 25% more than the $255 dollars spent in 1996. At the same time, the price of tobacco related products went up by a staggaring 106% over the same period. Tobacco products are more expensive in the US than ever before and people are spending more money on them.

Sadly, poor people also spend more money on tobacco. People with a college education spend 1/2 as much as their peers without a college education. People with only a High School education spend $441 on tobacco.

When you get into the details of the numbers it gets worse. For those households that actually report tobacco expenditure, the average expenditure for the high school group is $1,453 per year. And, 30% of high school graduates with no college fall into this catagory.

Lets do some back of the envelope calculations to figure out what that is costing them over a lifetime. Say they start working at 18 and retire at 65, for a total working life of 47 years (which may not be the average, to be fair). That hypothetical household would spend $68,291 in cash. Say they were to invest that money in the S&P500 every year; at age 65, they could expect to have $1,551,122.87, if they made monthly contributions and the market averaged 10% over that period, which is actually below its historical average. Therefore, some of America's poorest households (smokers without a college education), would be millionaires if they invested their money rather than burned it.

Why don't we teach kids that in school?

[1] (defined as a family household, or single independent person, or a household in which unrelated members share expenditures)

Thursday, June 01, 2006

Is this Diplomacy?

The US administration has put forward its most recent overture to Iran as a clear sign of its willingness to pursue diplomacy. Although I agree that the US should begin negotiating with Iran, this recent proposal is unlikely to convince Iran to give-up its nuclear program, for the same reason that European carrots didn't work. The key is that neither the US nor Europe is offering what Iran really wants: Security.

Successful diplomacy requires empathizing with the other party.

Why does Iran want nuclear weapons? Since the first Gulf War, it became blatantly obvious that no country, relying solely on conventional weapons, could stop the US from invading. The world watched on 24 hour news stations as the US squashed the Iraqi army. Gulf War I was a clear signal to the world: the US is unrivaled in military power, by a factor. Unlike Gulf War II, however, the first Gulf War did not overly concern most states. Iraq had invaded Kuwait, and the allied forces simply restored old boundaries. Although the US was criticized for playing 'World Police', our actions restored state sovereignty and we left Iraq. (We didn't out Saddam because we realized that it would have significant destabilizing effects in the area; a lesson GW and the neo-cons never learned.)

Gulf War I showed Iran that the US had the capability to invade and overthrow any state in the region; our rhetoric and actions post-9/11 showed that we have a desire and willingness to do so. Iran was labelled as part of the "axis of evil." US foreign policy became, seemingly, not only to hunt down and destroy terrorists and states aiding and abetting terrorist activities, but also to overthrow government that might, possibly, at some distant future, pose a threat to the US. Consider George Bush's recent remarks concerning the invasion of Iraq. He has stated on numerous occasions, that even if he had known that Iraq had no WMD and had no connections to Al Qaeda, he still would have invaded.

What message does this send to the Iranians? If I were an Iranian leader, I would logically conclude that the US is willing and able to destroy my government, regardless of whether I have WMD, and regardless of whether I have aided terrorist groups carrying out attacks on US targets. My only defense against such an invasion would be developing nuclear weapons capable of deterring US aggression. Since I lack the technology to develop an inter-continental ballistic missile capable of reaching the US, I would hope that my ability to destroy Israel would be a sufficient deterrent. Nothing in George Bush's actions would make me believe otherwise.

Iran's newspapers express this distrust. Here is Iran's Aftab-e-Yazd had to say about America's proposal, "We have to be careful not to be trapped by Western tactics and should not let these tactics raise false hopes among us." The Iranian people do not want war with the US. Joseph Cirincione of the Center for American Progress argues that Iran isn't even sure it wants nuclear weapons. What they want is security.

Is the US giving them security with this newest proposal? Not yet.

President Bush said: "Our message to the Iranians is that one, you won't have a weapon, and two, that you must verifiably suspend any programs at which point we will come to the negotiating table to work on a way forward." But the US will not rule out the option of a military strike, which what the Iranian government cares about.

Via the New York Times, "Administration officials characterized their offer as a test of whether the Iranians want engagement with the West more than they want the option to build a nuclear bomb some day. " Yes, Iran wants the legitimacy of engagement with the West, but the current overture is predicated on Iran giving up what it conceives as its only hope of security. Until the US convinces Iran that it doesn't need the Bomb, it won't be coming to dinner any time soon.